Judge: Stephen Morgan, Case: 23AVCV00191, Date: 2023-12-12 Tentative Ruling
Case Number: 23AVCV00191 Hearing Date: December 12, 2023 Dept: A14
Background
This is a mortgage foreclosure
action. Plaintiff Rodney Rouzan (“Plaintiff”) alleges that (1) on June 16,
2022, Defendant Shellpoint Mortgage Servicing (“Newrez”) caused to be recorded
a notice of default and an election to sell in the official records of Los
Angeles County for the property commonly known as 3109 Kilt Court, Lancaster,
California 93535 (the “Subject Property”); (2) Newrez published and posted at
various times and in various places notices of their intent to sell the Subject
Property at a public auction on June 16, 2022 at 9:00 at 1311 Sycamore Drive in
Norwalk, Los Angeles County, California; (3) Nerez attempted to sell the
Subject Property to Defendant GHI Investments LLC (“GHI”) for valuable
consideration, and (4) the sale was wrongful because Plaintiff did not grant
and convey to any trustee the Subject Property.
On February 21, 2023, Plaintiff
filed his Complaint alleging three causes of action for: (1) Wrongful
Foreclosure; (2) Cancellation of Trustee Deed; and (3) Quiet Title.
On April 12, 2023, Newrez and GHI
were placed into default.
On April 28, 2023, the Court
found this case and 23AVUD00441 GHI INVESTMENT LLC vs RODNEY J ROUZAN related
within the meaning of California Rules of Court, Rule 3.300(a). This case,
23AVCV00191, was deemed the lead case.
On July 26, 2023, Newrez filed a
Notice of Appearance.
On July 31, 2023, Newrez filed a
Stipulation Set Aside Entry of Default, subsequently granted.
On August 29, 2023, Plaintiff
filed his First Amended Complaint (“FAC”), alleging the same causes of action,
but adding the following parties: The Bank of New York Mellon FKA the Bank of
New York as trustee for the Certificate Holders Cwalt, Inc. Altenrative Loan
Trust 2005-47 CB; Barrett Daffin Frappier Treder & Weiss LLP; Michelle
Lorene Gomez; Bichen Cui; Eric Jay Gonzalez; Alejandro Galvan; Juan Antonio
Lomeli; Myung S. Moon; Angel Martinez; Victor Ramos; Irene Marie Cabrera; Juan
Jose Chavez; Hyo Jung Yoon; Marin N. Hernandez; Jose Diaz; David Fang; Catalina
Alvarez-Quiroz; Nicole Anna; Christina Uribe; Jose Santiago; Estelle
Magallanes; Julio Hernandez; Fernando Lee Cuevas; Juan Torrez; David Anthony
Aldana; Marco Antonio Moreno; Francisco Lopez; Elsie H. Cruz; Angelica Ann
Chavaria; Jose Gonzalez; Irma Granados; Rosalia Perez; John Najaryan; Gloria
Inez Ramos; Gina Alvarez; Rosa Banos; Omar Rojas; and all persons unknown
claiming any legal or equitable right, title, estate, lien, or interest in the
property described in the complaint adverse to Plaintiff’s title, or any cloud
on Plaintiff’s title thereto.
On September 27, 2023, Plaintiff
filed a Motion for Order to Allow Recording of Lis Pendens, subsequently
granted on November 15, 2023.
On October 20, 2023, Newrez and Defendant
Bank of New York Mellon FKA the Bank of New York as Trustee for the Certificate
Holders Cwalt, Inc Alternative Loan Trust 2005-47 CB (“BNY Mellon” and
collectively “Moving Defendants”) filed their Demurrer to the FAC.
On November 13, 2023, Defendant
Barret Daffin Frappier Treder & Weiss LLP (“BDF”) filed a Declaration of
Non-Monetary Status.
On November 29, 2023, Plaintiff
filed his Opposition.
On December 05, 2023, Moving
Defendants filed their Reply.
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Legal Standard
Standard for Demurrer – A demurrer for sufficiency tests whether
the complaint states a cause of action.¿ (Hahn v.¿Mirda¿(2007) 147 Cal.
App. 4th 740, 747.) ¿When considering demurrers, courts read the allegations
liberally and in context.¿ (Taylor v. City of Los Angeles Dept. of Water and
Power¿(2006) 144 Cal. App. 4th 1216, 1228.)¿ In a demurrer proceeding, the
defects must be apparent on the face of the pleading or by proper judicial
notice.¿ (Cal. Code Civ. Proc. § 430.30(a).)¿A demurrer tests the pleadings
alone and not the evidence or other extrinsic matters.¿ (SKF Farms v.
Superior Court¿(1984) 153 Cal. App. 3d 902, 905.)¿ Therefore, it lies only
where the defects appear on the face of the pleading or are judicially
noticed.¿¿(Ibid.)¿¿The only issue involved in a demurrer hearing is
whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action.¿ (Hahn,¿supra,¿147 Cal.App.4th at
747.)¿¿¿¿¿¿¿¿¿¿
¿¿¿¿¿¿¿¿¿¿
A general demurrer admits the truth of all
factual, material allegations properly pled in the challenged pleading,
regardless of possible difficulties of proof.¿¿(Blank v. Kirwan (1985)
39 Cal.3d 311, 318.)¿ Thus, no matter how unlikely or improbable, plaintiff’s
allegations must be accepted as true for the purpose of ruling on the
demurrer.¿¿(Del E. Webb Corp. v. Structural Materials Co.¿(1981) 123
Cal.App.3d 593, 604.)¿ Nevertheless, this rule does not apply to allegations
expressing mere conclusions of law, or allegations contradicted by the exhibits
to the complaint or by matters of which judicial notice may be taken.¿¿(Vance
v. Villa Park¿Mobilehome¿Estates¿(1995) 36 Cal.App.4th 698, 709.)¿A general
demurrer does not admit contentions, deductions, or conclusions of fact or law
alleged in the complaint; facts impossible in law; or allegations contrary to
facts of which a court may take judicial notice.¿¿(Blank,¿supra,
39 Cal.3d at p. 318.)¿¿¿¿¿¿¿¿¿¿¿
¿¿¿¿¿¿¿¿¿¿¿
Pursuant to¿Code Civ. Proc.¿§430.10(e), the
party against whom a complaint has been filed may object by demurrer to the
pleading on the grounds that the pleading does not state facts sufficient to
constitute a cause of action.¿ It is an abuse of discretion to sustain a
demurrer without leave to amend if there is a reasonable probability that the
defect can be cured by amendment.¿¿(Schifando¿v. City of Los Angeles¿(2003)
31 Cal.4th 1074, 1082,¿as modified (Dec. 23, 2003).)¿¿¿¿¿¿¿¿¿¿¿
¿¿
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¿¿¿¿¿
Meet and Confer Requirement – Before filing a demurrer or a motion to strike, the demurring or
moving party is required to meet and confer with the party who filed the
pleading demurred to or the pleading that is subject to the motion to strike
for the purposes of determining whether an agreement can be reached through a
filing of an amended pleading that would resolve the objections to be raised in
the demurrer.¿ (Cal. Code Civ. Proc. §§ 430.41 and 435.5.)¿The Court notes that
this requirement has been satisfied. (See Decl. Ronghua Guan ¶¶ 4-6.)
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Discussion
Judicial Notice –
Moving Defendants’ Request for Judicial Notice No. 1 [A true and
correct copy of a deed of trust recorded against the property 3109 Kilt Court,
Lancaster, California 93535 on July 8, 2005 in the official records of Los
Angeles County as document number 051607591] – GRANTED under Cal. Evid.
Code § 452(c).
Moving Defendants’ Request for Judicial Notice No. 2 [A true and
correct copy of a substitution of trustee recorded on October 5, 2009 in the
official records of Los Angeles County as instrument no. 20091506345] –
GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 3 [A true and correct copy of the substitution of trustee
and assignment of deed of trust recorded on October 27, 2010 in the official
records of Los Angeles County as instrument no. 20101537177] – GRANTED under
Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 4 [A true and correct copy of the notice of default
recorded on October 28, 2011 in the official records of Los Angeles County as
instrument no. 20111466151] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 5 [A true and correct copy of the original complaint in the
matter filed in the U.S. District for the Central District of California,
Rouzan v. ReconTrust Company, N.A., et al., Case No. 2:12-cv-03041-PA, Docket
No. 1] – GRANTED under Cal. Evid. Code § 452(d).
Moving Defendants’ Request for Judicial Notice No. 6 [A true and
correct copy of the court order dated August 3, 2012 in the matter filed in the
U.S. District for the Central District of California, Rouzan v. ReconTrust
Company, N.A., et al., Case No. 2:12-cv-03041-PA, Docket No. 12] – GRANTED
under Cal. Evid. Code § 452(d).
Moving Defendants’ Request for Judicial Notice No. 7 [A true and
correct copy of the original complaint in the matter filed in the Los Angeles
County Superior Court of California, Rouzan v. KB Mortgage Company, et al.,
Case No. MC024393] – GRANTED under Cal. Evid. Code § 452(d).
Moving Defendants’ Request for Judicial Notice No. 8 [A true and
correct copy of the first amended complaint in the matter filed in the Los
Angeles County Superior Court of California, Rouzan v. KB Mortgage Company, et
al., Case No. MC024393] – GRANTED under Cal. Evid. Code § 452(d).
Moving Defendants’ Request for Judicial Notice No. 9 [A true and
correct copy of the order granting motion for judgment on the pleadings in the
matter filed in the Los Angeles County Superior Court of California, Rouzan v.
KB Mortgage Company, et al., Cause No. MC024393] – GRANTED under Cal. Evid.
Code § 452(d).
Moving Defendants’ Request for Judicial Notice No. 10 [A true
and correct copy of the affirmance in the matter Rouzan v. Mortgage Electronic
Registration Systems, Inc., et al, by the Court of Appeals of California, Cause
No. B270144] – GRANTED under Cal. Evid. Code § 452(d).
Moving Defendants’ Request for
Judicial Notice No. 11 [A true and correct copy of the substitution of trustee
recorded on May 16, 2014 in the official records of Los Angeles County as
instrument no. 20140507936] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 12 [A true and correct copy of the substitution of trustee
recorded on September 4, 2018 in the official records of Los Angeles County as
instrument no. 20180891544] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 13 [A true and correct copy of a notice of default recorded
on September 12, 2018 in the official records of Los Angeles County as
instrument no. 20180929176] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for
Judicial Notice No. 14 [A true and correct copy of the notice of trustee's sale
recorded on December 20, 2018 in the official records of Los Angeles County as
instrument no. 20181294331] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for Judicial Notice No. 15 [A true
and correct copy of the notice of trustee's sale recorded on October 5, 2021 in
the official records of Los Angeles County as instrument no. 20211509743] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for Judicial Notice No. 16 [A true
and correct copy of the notice of trustee's sale recorded on March 3, 2022 in
the official records of Los Angeles County as instrument no. 20220249086] – GRANTED under Cal. Evid. Code § 452(c).
Moving Defendants’ Request for Judicial Notice No. 17 [A true
and correct copy of the notice of trustee's sale recorded on May 3, 2022 in the
official records of Los Angeles County as instrument no. 20220477427] – GRANTED under Cal. Evid. Code § 452(c).
Application – As an
initial matter, Moving Defendants’ Notice states that they demur to the entire
FAC due to uncertainty. However, as Moving Defendants are able to articulate
arguments as to each cause of action, it is patent that the FAC is not uncertain
under the definition provided by Cal. Code Civ. Proc. § 430.10(f). The Court
also notes that, aside from the legal standard provided by Moving Defendants,
there is no discussion of uncertainty within the Demurrer.
As to the First Cause of Action
(Wrongful Foreclosure), Moving Defendants argue that the claim fails as there
are no alleged facts in the FAC showing that Moving Defendants lacked authority
to foreclose and the conclusory allegations are contradicted by judicially
noticeable facts. Further, Moving Defendants present that the judicially
noticeable documents show: (1) Plaintiff executed a valid deed of trust; (2) BNY
Mellon substituted BDF as rightful trustee on September 04, 2018; (3) BDF
conducted a valid sale on June 16, 2022; and (4) the notices of default and
notices of sale recorded contradict the Plaintiff’s allegations that he was not
in default under the terms of his loan documents. Because of this, Moving
Defendants present that Plaintiff’s Second Cause of Action (Cancellation of
Instrument) and Third Cause of Action (Quiet Title) fail.
Moving Defendants further present
that claim preclusion is at issue as (1) Plaintiff has two previous lawsuits
seeking remedy for the same harm against BNY Mellon’s 2012 trustee, ReconTrust,
and 2012 servicer, Bank of America, N.A. (“BANA”); and (2) Newrez and BNY
Mellon are in privity with ReconTrust and BANA as BNY Mellon was a defendant in
both suits and in privity with its 2012 trustee and servicer and Shellpoint is
a successor servicer to BANA. Moving Defendants argue that, as privity applies,
the two prior final judgments bar this instant action.
Plaintiff presents that Moving
Defendants’ arguments mix Federal Rules of Civil Procedure with California
Rules of Civil Procedure as they argue that the FAC fails to state a claim upon
which relief can be granted and not that the FAC fails to state sufficient
facts constituting a cause of action. Plaintiff next argues that the FAC states
sufficient facts to constitute the three causes of action as each cause of
action meets its respective pleading requirements. Plaintiff further presents
that the previous two judgments are void because the courts acted in excess of
jurisdiction in granting relief. Under this section, Plaintiff states that the
judgments were procured by fraud and that BNY Mellon has no standing to defend.
Specifically, Plaintiff believes that BNY Mellon misled both courts. Finally,
Plaintiff presents that the FAC is not uncertain as Moving Defendants are
apprised of the issues to be met.
Moving Defendants present that (1)
Plaintiff’s first contention, that the assignment “was not of the note and deed
of trust identified by the loan number on the face of [the note and deed of
trust][,]” (Opp. 8:5-6) is unsupported by legal authorities; (2) Plaintiff’s
next contention, that there was no effective assignment from MERS to BN Mellon
because two duplicative assignments were recorded (Opp. 8:6-12), shows that KB
Home Mortgage Company for MERS assigned all beneficial interest to BNY Mellon
(See Request for Judicial Notice, Exh. 3) and, at most, the second assignment
was ineffective as MERS had already signed away its beneficial interest; and
(3) Plaintiff’s contention that neither assignment was effective because
“appear executed by MERS in its own right, and not as nominee [for KB Home
Mortgage Company][]” (Opp. 8:9-10) does not address relevant case law which
holds that MERS does have authority as the lender’s nominee to assign the loan
on the lender’s behalf. Moving Defendants further present that Plaintiff’s
wrongful foreclosure theory undercuts his cancelation claim as he does not
allege “[a] written instrument, in respect to which there is a reasonable
apprehension that if left outstanding it may cause serious injury to a person
against whom it is void or voidable[]” and Plaintiff cannot salvage this cause
of action because Newrez and BNY Mellon do not currently claim adverse title.
(See Cal. Civ. Code § 3412.) Finally, Moving Defendants emphasize that res
judicata remains an issue and Plaintiff does not contest that the elements
have been met, but rather suggests that the judgments are not final as they are
obtained by fraud. Moving defendants argue that the two final judgments remain
and bar this lawsuit.
The Court need not discuss
uncertainty as it has been previously addressed. Plaintiff’s first argument is
not well taken by this Court as it is clear from the Notice and content of the
Demurrer that Moving Defendants are arguing that the FAC does not state facts
sufficient to constitute a cause of action under Cal. Code Civ. Proc. §
430.10(e). Plaintiff’s argument regarding a judgement obtained by fraud is,
likewise, not well taken by this Court. Should Plaintiff have believed that
there was error in the previous final judgments, Plaintiff’s remedy was to
appeal the judgments rather than file a new case. From the judicially noticed
documents, it appears that Plaintiff appealed only the 2014 California case and
the appellate court affirmed judgment. (See Moving Defendants’ Request for Judicial
Notice, Exh. 10.) The Court notes that the federal case was dismissed for lack
of viable claims. (See Id. at Exh. 6.)
The doctrine of res judicata
precludes the re-litigation of certain matters which have been resolved in a
prior proceeding under certain circumstances. (Brinton v. Bankers Pension
Services, Inc. (1999) 76 Cal.App.4th 550, 556.) “Res judicata, or
claim preclusion, prevents relitigation of the same cause of action in a second
suit between the same parties or parties in privity with them.” (Mycogen
Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) The decision in a prior
proceeding is res judicata when it is final and on the merits; the
successor action is based on the same cause of action as the former one; and
the parties to the former proceeding are the parties in the successor action or
are in privity with them. (See Zevnik v. Superior Court (2008) 159
Cal.App.4th 76, 82-83; Levy v. Cohen (1977) 19 Cal.3d 165, 171.)The judicially
noticeable documents show (1) the 2012 federal suit was against BNY Mellon’s
then-trustee ReconTrust and then-servicer BANA, and (2) that BNY Mellon was a
party to the 2014 action and as was BANA, its then-servicer. (See Id. at Exhs.
6 and 10.) The Court need not discuss privity as to BNY Mellon as it was
clearly a party to one of the actions in which a final judgment was rendered. “A
nonparty alleged to be in privity must have an interest so similar to the
party's interest that the party acted as the nonparty's 'virtual
representative' in the first action.” (DKN Holdings, LLC v. Faerber
(2015) 61 Cal.4th 813, 825) Determination of privity depends on the fairness of
binding a party with the result obtained in the earlier proceeding in which it
did not participate. (See Citizens for Open Access to Sand and Tide, Inc. v.
Seadrift Association (1998) 60 Cal.App.4th 1053, 1070.) “Whether someone is
in privity with the actual parties requires close examination of the
circumstances of each case.” (Id.) Here, Newrez is the servicer for BNY
Mellon. As such, it stands in the same position as BANA and has an interest so
similar to BANA’s that BANA “acted as the nonparty's 'virtual representative'
in the first action.” (DKN Holdings, LLC, supra, 61 Cal.4th at
825.) Both previous cases focused on the same issue: the foreclosure on the
Subject Property. (See Moving Defendants’ Request for Judicial Notice, Exhs. 6
and 10.) As it stands, there are two final judgments barring this instant
action.
Leave to amend must be allowed where there
is a reasonable possibility of successful amendment. (Goodman v. Kennedy¿(1976),
18 Cal.3d 335, 348.) While under California law leave to amend is liberally
granted, “leave to amend should not be granted where, in all probability, amendment would be futile.” (Vaillette
v. Fireman's Fund Ins. Co. (1993), 18 Cal. App. 4th 680, 685).¿ “A trial
court does not abuse its discretion when it sustains a demurrer without¿leave
to amend¿if either (a) the facts and the nature of the claims are clear and no
liability exists, or (b) it is probable from the nature of the defects and
previous unsuccessful attempts to plead that the plaintiff cannot state a
claim.” (Cantu v. Resolution Trust Corp.¿(1992)¿4 Cal.App.4th 857,
889.)¿¿Here, there is no possibility of a successful amendment due to res
judicata.
Accordingly, the Demurrer is
SUSTAINED without leave to amend.
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Conclusion
Defendants Newrez LLC DBA
Shellpoint Mortgage Servicing and Bank of New York Mellon’s Demurrer is
SUSTAINED without leave to amend.